Developing professional practice in organizations

Pilot Project: Managing Absenteeism at Exxon Mobil Oil Company

Today, Exxon Mobil (hereinafter alternatively "Mobil" or "the company") is the world's largest publicly traded international oil and gas company (About us, 2010). The company competes on a global basis in the exploration, production, transportation, and marketing of crude oil and natural gas, as well as the manufacture, transportation and sale of various petroleum-based products (Company profile 2010). The company's holdings are valuable and extensive, and at the end of 2009, Mobil operated more than 16,500 gross and 13,700 net-operated wells (Company profile 2010). Besides its domestic operations in the United States, Mobil also maintains corporate offices in Africa, Canada, Europe, the Asia Pacific, the Middle East, Russia/Caspian region, and South America (Company profile 2010). With tens of thousands of employees working in these far-flung regions of the world, it is not surprising that effective human resource management (HRM) practices represent a vitally important element in the company's performance management system. One important feature of an effective HRM program is the ability of the company to manage employee absenteeism, an issue that has been shown time and again to detract from a company's performance and profitability, and it is this issue that forms the basis for this pilot project which is discussed further below.

Preliminary Review of the Literature

While companies differ in the specific manner in which they estimate the costs that are associated with absenteeism, it is clear that these costs are on the rise and have been for several years (Avey, Patera & West

2006). According to Avey and his associates, "Absenteeism levels in the U.S. reached a five-year high in 2004, with related costs estimated to range from $60,000 to more than $1 million annually for small and large companies, respectively" (42). These trends represent a clarion call to action for human resource managers seeking to solidify their role as a strategic partner in helping their organizations achieve their goals and grow their businesses (Avey et al. 2006). Therefore, effective HRM initiatives that target absenteeism represent a viable area in which human resource managers can help reduce these costs and improve productivity (Avey et al. 2006). According to these authors, "In order to accomplish this goal, researchers and practitioners must first seek to understand potential predictors of absenteeism behavior that may be incorporated into selection systems and lead to developmental programs aimed at reducing absenteeism behavior within organizations" (Avey et al. 2006, 42).

Indeed, by virtually any measure, the costs that are associated with employee absenteeism can be enormous, but these costs transcend the individual companies that are involved to include the national economies in the countries in which larger corporations compete. For example, Buschak, Craven and Ledman (1999) emphasize that, "Unauthorized or unscheduled absenteeism is a problem for every organization or business. It creates cost and productivity problems, puts an unfair burden on the majority of employees who show up for work, ultimately hinders customer satisfaction, and drains the country's economy" (26). This point is also made by Solomon (2002) who emphasizes that besides larger corporations, inordinately high absenteeism levels among even small- to medium-sized enterprises can have a cumulative effect on a nation's economy. According to Solomon, "On a nationwide basis, one of the biggest contributors to non-productivity is the fact that people aren't at work. In order to be productive, you have to have people on the job" (28).

This is a particularly salient point given the current global economic downturn, and it is important to squeeze every drop of productivity out of employees in order to survive. Indeed, according to Austin (2006), "Absenteeism is costly. According to the Society for Human Resources Management, absenteeism costs employers roughly $600 per employee every year, and this number does not factor in lost productivity, overtime for other employees, or the cost of using temps" (1). With tens of thousands of employees, it is apparent that left unchecked, absenteeism could cost companies such as Exxon Mobil tens of millions of dollars in lost productivity over the course of a single year, but this is just part of the costs that are associated with the absenteeism equation. This point is made by Hugh Murray (2003), author of a new training video entitled, "Challenging Absenteeism." According to Murray, "The damage done by absence is huge. The salary cost of workers who are away is only the tip of the iceberg. Absence damages the morale of people who cover for those absent and deprives organisations of skills and knowledge making planning impossible and playing havoc with productivity" (9).

The adage, "decisions are made by those who show up" certainly holds true in the 21st century, and Buschak and her associates point out that, "Experience shows that better attendance is synonymous with better quality, lower costs, and greater productivity" (27). Unfortunately, virtually every company tends to experience some level of employee absenteeism. For instance, according to Miller, Murnane and Willett (2008), "Rates of absenteeism and the effects of employee absences on productivity are topics of conversation in many organizations in many countries. One reason is that high rates of employee absence may signal weak management and poor labor-management relations. A second reason is that reducing rates of employee absence may be an effective way to improve productivity" (71).

The research to date has shown that employee absenteeism is responsive to formal as well as informal employment policies; for instance, absenteeism levels have been found to be positively associated with the amount of leave provided by a company, as well as the amount of days of paid sick or personal leave that are allowed to be resold to the company (Miller et al. 2008). In addition, absenteeism levels have been reduced when employers implement incentive programs such as buy-backs of unused sick leave or the provision of bonuses for employees with outstanding attendance rates (Miller et al. 2008). One of the key factors that has been shown to contribute to higher levels of employee absenteeism is substance abuse. Studies have shown time and again that employee assistance programs (EAPs) can help reduce the incidence of substance abuse in the workplace (Starr 2002).

Research Strategy

The research strategy used by this pilot project was a qualitative analysis of the relevant peer-reviewed, scholarly and organizational literature concerning absenteeism in general and absenteeism at Mobil in particular to identify past successes and potential opportunities for improvement in effectively managing the company's absenteeism levels.

Data Analysis and Findings

Studies have found that absenteeism levels can be effectively managed when employers confront the issues and take the steps necessary to address them (Murray 2003). According to Murray, "These measures tackle two areas - the culture of the organisation and the reasons why people who could come to work do not" (10). As to the former, Solomon (2002) points out that, "The way policies are written and the way employees are given incentives to come to work are important because they codify expectations and create a strong cultural mind-set" (28). In this regard, Mobil has consistently promoted a corporate culture that places a high value on employee contributions to develop the former measure while taking proactive steps to address the latter. The latter measure includes on-the-job accidents, problems with alcohol, drugs, due to emotional or financial stress, or relocation difficulties, etc. (Smits & Pace 1999). For example, although the company has historically made every effort to accommodate special employee needs, Mobil has prevailed in lawsuits that were brought by employees who were terminated for excessive absenteeism when other interventions failed to resolve the problem (Roberts 1998).

According to Austin, one noteworthy case in which the company prevailed was Salinas v. Exxon Mobil Corp. (2005 WL 2122065, S.D. Tex. Aug. 31, 2005). In this case, the employee in question, Salinas, exhausted all of her personal and sick leave over the course of 2-1/2 years while receiving full pay. After placing Salinas on paid disability leave, the company attempted to locate a position that was suitable for her disabilities but was unable to do so; the employee brought suit against Mobil under the Americans with Disabilities Act and the Family and Medical Leave Act. The court determined that while Salinas was protected by applicable law, the company was justified in terminating her for excessive absenteeism even though part of her absences was covered by legitimate leave. This case established a national precedent whereby companies that terminate employees for excessive absenteeism can take into account the aggregate amount of leave that is taken by an employee in making a termination decision (Austin 2006).

The company does not specifically target employees with inordinately high absenteeism rates, though, and makes every effort to accommodate disabilities and diseases, including substance abuse, through a comprehensive employee assistance program. According to Pope (1999), "An effective employee assistance program (EAP) can be a wise investment. Through EAPs, distressed workers may get counseling and referrals before their troubles become insurmountable" (81). Discerning the precise impact that EAPs have on absenteeism at Mobil is difficult because the company does not routinely release this type of data. For example, Ruiz (2006) points out that, "The role that EAPs play in attenuating these potentially disruptive issues is difficult to assess because companies zealously guard results of their programs from the public eye" (46).

Despite these constraints, though, it is possible to gauge the effectiveness of Mobil's EAP initiatives based on the typical costs savings realized by similarly situated enterprises. For instance, Ruiz adds that, "EAP providers contend that their services are a critical component in lowering the cost of health care and in bolstering productivity. EAPs can reduce absenteeism and tardiness by 10% and potentially boost productivity by as much as 25%" (46). In this regard, what is known about the company is that success rates between 70% and 85% have been reported by Mobil concerning the effectiveness of its employee assistance programs that have been targeted at reducing the incidence of substance abuse by company employees (Starr 2002). At a cost of approximately $30-$60 per employee per year, EAPs clearly represent an effective approach to managing employee absenteeism. In fact, the company also subscribes to professional stress reduction programs offered by Hopson Global Education and Training as part of its corporate approach to mitigating employee absenteeism levels (Benefits for your company 2002). In addition, the company also provides its employees with debt management counseling services in an effort to reduce personal finance-related stress levels that may exacerbate absenteeism (Watson 2010).